UK hands water customers bigger payouts for service failures

LONDON (Reuters) - Britain said it was increasing compensation payments for customers whose water supply is temporarily cut off, its latest attempt to improve the water sector after poor service and environmental pollution sparked public anger.

The government is trying to fix Britain's broken privatised water industry after years of under-investment caused frequent sewage spills. It launched a review of the sector in October aimed at strengthening regulation and addressing the issues.

The Department for Environment said on Tuesday that automatic payments of up to 2,000 pounds ($2,529) could now be made for water supply outages, sewer flooding, low water pressure and notices to boil tap water before drinking it.

Some compensation payments for water supply problems would now be made compulsory, the government statement added.

"This is another step forward in our plans to reform the water sector so it serves customers and the environment better," Environment Minister Steve Reed said. "We are clear that the public deserve better compensation when things go wrong, so I’m taking action to make sure that happens."

Under the government's new payout system, low water pressure could now result in households receiving a payment of up to 250 pounds, up from the 25 pounds previously, while "do not drink" notices could see a 220 pound payment, up from around 30 pounds.

Britain's water companies include names such as Thames Water, Severn Trent and United Utilities.

($1 = 0.7909 pounds)

(Reporting by Sarah Young; Editing by Sachin Ravikumar)